[Federal Register Volume 71, Number 143 (Wednesday, July 26, 2006)]
[Notices]
[Pages 42424-42427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-11897]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-27421; File No. 812-13243]


AXA Equitable Life Insurance Company, et al.; Notice of 
Application

July 20, 2006.
AGENCY: Securities and Exchange Commission (``SEC'' or the 
``Commission'').

ACTION: Notice of application for an amended order under Section 6(c) 
of the Investment Company Act of 1940, as amended (``Act''), granting 
exemptions from the provisions of Sections 2(a)(32), 22(c) and 
27(i)(2)(A) of the Act and Rule 22c-1 thereunder.

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Applicants: AXA Equitable Life Insurance Company (``AXA Equitable''), 
AXA Life and Annuity Company (``AXA Life and Annuity,'' and together 
with AXA Equitable, ``the Company''), Separate Account No. 45 of AXA 
Equitable, Separate Account No. 49 of AXA Equitable (``SA 49''), 
Separate Account VA of AXA Life and Annuity (the foregoing separate 
accounts each an ``Account,'' and collectively, the ``Accounts''), AXA 
Advisors, LLC, and AXA Distributors, LLC (collectively, 
``Applicants'').

Summary of Application: Applicants seek an order to amend an Existing 
Order (defined below) to grant exemptions from the provisions of 
Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and Rule 22c-1 
thereunder to the extent necessary to permit Applicants to recapture 
certain credits applied to contributions made under certain amended 
deferred variable annuity contracts and certificates (``credits''), 
described herein, including certain amended certificate data pages and 
endorsements, that AXA Equitable will issue through the Accounts (the 
``2006 Amended Contracts''), and under contracts and certificates, 
including certain certificate data pages and endorsements, that AXA 
Equitable may issue in the future through the Accounts, and any other 
separate accounts of AXA Equitable or AXA Life and Annuity 
(collectively, ``Future Accounts'') that are substantially similar in 
all material respects to the 2006 Amended Contracts (the ``Future 
Contracts''). Applicants also request that the order being sought 
extend to ``Equitable Broker-Dealers,'' as defined in the applications 
for the Existing Order (defined below) (``Prior Applications'').\1\
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    \1\ The Equitable Life Assurance Society of the United States, 
Rel. Nos. IC-23774 (Apr. 7, 1999) (File No. 812-11388), 23889 (July 
2, 1999) (File No. 812-11662), 24963 (April 26, 2001) (File No. 812-
12392), and 26170 (August 26, 2003) (File No. 812-13010).

Filing Date: The application was filed on October 24, 2005, and amended 
and restated applications were filed on March 29, 2006, and July 11, 
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2006.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Secretary of the 
Commission and serving Applicants with a copy of the request, 
personally or by mail. Hearing requests should be received by the 
Commission by 5:30 p.m. on August 18, 2006, and should be accompanied 
by proof of service on Applicants in the form of an affidavit or,

[[Page 42425]]

for lawyers, a certificate of service. Hearing requests should state 
the nature of the requester's interest, the reason for the request, and 
the issues contested. Persons who wish to be notified of a hearing may 
request notification by writing to the Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-1090. Applicants, c/o AXA Equitable Life 
Insurance Company, 1290 Avenue of the Americas, New York, NY 10104, 
Attn: Dodie Kent, Esq., copy to Goodwin Procter LLP, 901 New York Ave., 
NW., Washington, DC 20001, Attn: Christopher E. Palmer.

FOR FURTHER INFORMATION CONTACT: Sonny Oh, Staff Attorney, or Zandra 
Bailes, Branch Chief, Office of Insurance Products, Division of 
Investment Management at (202) 551-6795.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the SEC's Public Reference Branch, 100 F Street, NE., Room 1580, 
Washington, DC 20549 (tel. (202) 551-8090).

Applicants' Representations

    1. On May 3, 1999, the Commission issued an order (``May 1999 
Order'') \2\ exempting certain transactions of Applicants from the 
provisions of Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and 
Rule 22c-1 thereunder. The May 1999 Order specifically permits the 
recapture, under specified circumstances, of certain 3% Credits applied 
to contributions made under the Contracts or the Future Contracts as 
defined in the application for the May 1999 Order. Specifically, the 
May 1999 Order permits recapture of Credits if the Contract is returned 
during the free look period or if contributions are made within three 
years of annuitization.
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    \2\ The Equitable Life Assurance Society of the United States, 
Rel. No. IC-23822 (May 3, 1999) (File No. 812-11388).
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    2. On July 28, 1999, the Commission issued an order of exemption 
amending the May 1999 Order (``July 1999 Order'') \3\ to permit the 
recapture of Credits of up to 5% under the Contracts or the Future 
Contracts under the same specified circumstances.
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    \3\ The Equitable Life Assurance Society of the United States, 
Rel. No. IC-23924 (July 28, 1999) (File No. 812-11662).
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    3. On May 21, 2001, the Commission issued an order of exemption 
(``May 2001 Order'') \4\ amending the July 1999 Order to permit the 
recapture of Credits of up to 6% under the Contracts and the Future 
Contracts under the same and certain two additional circumstances. The 
additional circumstances include the recapture of Excess Credits when a 
Contract owner's Net First Year Contributions are lower than Total 
First Year Contributions, and when a Contract owner fails to fulfill 
the conditions of a Letter of Intent; all as described in the 
application for the May 2001 Order.\5\
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    \4\ The Equitable Life Assurance Society of the United States, 
Rel. No. IC-24980 (May 21, 2001) (File No. 812-12392).
    \5\ The Equitable Life Assurance Society of the United States, 
Rel. No. IC-24963 (April 26, 2001) (File No. 812-12392).
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    4. On September 26, 2003, the Commission issued an order of 
exemption (``September 2003 Order'') \6\ amending the May 2001 Order 
(together with the May 1999 Order, the July 1999 Order and the May 2001 
Order, the ``Existing Order'') to permit the recapture of Credits of up 
to 6% under amended contracts (``Amended Contracts'') and Future 
Contracts, as defined in the application for the September 2003 Order, 
under the same and one additional circumstance. The additional 
circumstance includes the recapture of Credits when a Contract owner 
starts receiving annuity payments under a life contingent annuity 
payout option before the fifth contract date anniversary, as described 
in the application for the September 2003 Order.\7\
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    \6\ The Equitable Life Assurance Society of the United States, 
Rel. No. IC-26192 (Sept. 26, 2003) (File No. 812-13010).
    \7\ The Equitable Life Assurance Society of the United States, 
Rel. No. IC-26170 (August 26, 2003) (File No. 812-13010). The 
prospectus for the Amended Contracts is included in a registration 
statement on Form N-4 for SA 49, Reg. No. 333-64749. The Amended 
Contracts covered by that prospectus are referred to as the 
Accumulator[reg]Plus\SM\ 04 Contracts.
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    5. The Amended Contracts provide for a death benefit payment upon 
the death of the annuitant. The death benefit payment is equal to the 
greater of: (1) The account value as of the date the Company receives 
satisfactory proof of death and other required forms and information; 
or (2) any applicable guaranteed minimum death benefit (``GMDB'') on 
the date of death (adjusted for any subsequent withdrawals, withdrawal 
charges and taxes that apply). Each GMDB is based on its related 
benefit base. The GMDB may be based on a benefit base calculated, in 
whole or in part, on contributions, but contributions for the purposes 
of this calculation do not include any Credits; or in part, on the 
highest account value as of particular dates, such as Contract 
anniversaries. The account value on a particular date includes any 
previously granted Credits, with any changes in value due to charges 
and investment performance.
    6. The Amended Contracts provide a benefit option called 
``Protection Plus.'' For an additional charge, the optional Protection 
Plus benefit provides an additional death benefit amount equal to 40% 
(25% for certain annuity issue ages) of the death benefit amount less 
total net contributions.
    7. The Amended Contracts offer a guaranteed principal benefit 
(``GPB'') with two options. Under the first option (``GPB Type A''), 
the owner selects a fixed maturity option, and the Company specifies 
the portion of the initial contribution to be allocated to that fixed 
maturity option in an amount that will cause the value to equal the 
amount of the entire initial contribution (including any Credits) on 
the fixed maturity option's maturity date. Under the second option 
(``GPB Type B''), the Company specifies the portion of contributions to 
be allocated to one or more specified investment options. If on the 
benefit maturity date the account value is less than the amount 
guaranteed under GPB Type B, the Company increases the account value to 
be equal to the guaranteed amount. The guaranteed amount under the GPB 
Type B is equal to the initial contribution adjusted for any additional 
permitted contributions (excluding any Credits), withdrawals from the 
Contract, and in some cases transfers out of a specified fixed maturity 
option.
    8. The Amended Contracts offer an optional guaranteed withdrawal 
benefit called ``Principal Protector'' (``GWB''). The GWB permits the 
owner to withdraw certain guaranteed amounts on an annual basis even if 
the account value falls to zero. The guaranteed withdrawal amounts are 
calculated using a GWB benefit base. The GWB benefit base is initially 
based on the initial contribution (not including any Credit).
    9. The Amended Contracts include various options permitting under 
some circumstances the Amended Contract to be continued after a death 
of an annuitant that would otherwise trigger a death benefit payment. 
In those circumstances, the account value will be increased to the 
amount that would have been paid under a death benefit payment if such 
death benefit is greater than current account value. These options are 
described below.
    10. Under the successor owner/annuitant option, if a spouse is the 
sole primary beneficiary or joint owner, and the annuitant dies, the 
spouse may elect to receive the death benefit or continue the Contract 
as successor owner/annuitant. If the surviving spouse

[[Page 42426]]

decides to continue the Contract, the Company increases the account 
value to equal any elected GMDB, if greater, plus any amount applicable 
under the Protection Plus additional death benefit, adjusted for any 
subsequent withdrawals.
    11. The spousal protection option permits, under some 
circumstances, spouses who are joint owners to increase the account 
value to equal the GMDB, if greater, plus any amount applicable under 
the Protection Plus additional death benefit, adjusted for any 
subsequent withdrawals.
    12. The beneficiary continuation option permits an individual to 
maintain a Contract in the deceased owner's name and receive 
distributions under the Contract, instead of receiving the death 
benefit in a single sum. If this election is made, the Company 
increases the account value to equal any elected GMDB, if greater, plus 
any amount applicable under the Protection Plus additional death 
benefit, adjusted for any subsequent withdrawals. If the owner/
annuitant dies, and the beneficiary continues GWB under the beneficiary 
continuation option, the GWB benefit base will be stepped-up to equal 
the account value, if higher, as of the transaction date that the 
Company receives the beneficiary continuation option election.
    13. Subject to any necessary regulatory approvals, the Company 
intends to offer a further amended version of the Amended Contracts 
(the ``2006 Amended Contracts''). The 2006 Amended Contracts will 
provide that, if the owner (or one of the joint owners) or annuitant 
dies within one year following the Company's receipt of a contribution 
to which Credit was applied, and that death triggers the calculation of 
a death benefit payment or recalculation of a benefit based on account 
value, the Company will reduce the account value by the amount of the 
Credit (or pro rated amount if required by state law).
    14. The 2006 Amended Contracts will be issued through SA 49. Units 
of interest in SA 49 under the 2006 Amended Contracts will be 
registered under the Securities Act of 1933.\8\ The Company may issue 
Future Contracts through SA 49, the other Accounts or Future Accounts.
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    \8\ On March 6, 2006, AXA Equitable and SA 49 filed a prospectus 
supplement for the Accumulator[reg]Plus\SM\ 04 Contracts (Reg. No. 
333-64749) reflecting the Credit recapture within one year of death 
(and noting that any such recapture is subject to obtaining the 
exemptive order requested). See footnote 7 for information 
identifying the prospectus for the Accumulator[reg]Plus\SM\ 04 
Contracts.
    In addition, on or about July 10, 2006, AXA Equitable plans to 
file in Reg. No. 333-64749 a new prospectus for a new generation of 
the Accumulator[reg]Plus\SM\ Contract, which will be referred to as 
the Accumulator[reg]Plus\SM\ 06 Contract, which is designed to 
replace the Accumulator[reg]Plus\SM\ 04 Contracts as necessary state 
approvals are obtained. The Accumulator[reg]Plus\SM\ 06 Contract 
will also include the Credit recapture within one year of death.
    The references in the application to the ``2006 Amended 
Contracts'' includes both Accumulator[reg]Plus\SM\ 04 Contracts with 
the addition of the Credit recapture within one year of death and 
all the Accumulator[reg]Plus\SM\ 06 Contracts (because all such 
Contracts will include the Credit recapture within one year of 
death).
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    15. That portion of the assets of each Account that is equal to the 
reserves and other contract liabilities with respect to that Account is 
not chargeable with liabilities arising out of any other business of 
AXA Equitable or AXA Life and Annuity. Any income, gains or losses, 
realized or unrealized, from assets allocated to an Account is, in 
accordance with the relevant contracts, credited to or charged against 
the Account, without regard to other income, gains or losses of AXA 
Equitable or AXA Life and Annuity. The same will be true of any Future 
Account of AXA Equitable or AXA Life and Annuity.
    16. Applicants assert that the Amended Contracts and the 2006 
Amended Contracts are substantially similar in all respects material to 
the Existing Order and to the relief requested by the application, 
except for the addition of one additional circumstance under which the 
Company will recapture Credits applied to contributions. In particular, 
under the 2006 Amended Contracts, if a death of an owner (or one of the 
joint owners) or annuitant that would trigger a death benefit occurs 
during the one-year period following the Company's receipt of a 
contribution to which a Credit was applied, the Company will reduce the 
account value by the amount of such Credit. However, the Credit 
recapture does not vary based on whether the benefit is triggered by 
the death of an owner or an annuitant and applies to any death that 
would trigger a death benefit. This account value reduction may affect 
the calculation of any death benefit payment, any supplemental death 
benefit payment under the Protection Plus benefit and account value and 
benefit calculations made at time of death when the Contract is 
continued under the successor owner and annuitant option, the spousal 
protection option, or the beneficiary continuation option. Each of 
these effects of the Credit recapture is discussed below.
    17. Under the 2006 Amended Contracts, the account value used in the 
calculation of the death benefit payment will be reduced by the amount 
of any Credit applied within one year prior to the death of the owner/
annuitant. The calculation of the GMDB will not be affected by the 
Credit recapture. A Credit recapture will reduce the death benefit 
payment if it causes the account value to fall below the GMDB or if the 
GMDB was already less than the account value. The Credit recapture will 
not affect the death benefit payment if the GMDB was greater than the 
account value before the Credit recapture.
    18. To the extent that the recapture of the Credit reduces the 
death benefit payment amount, the recapture will also reduce the amount 
of the Protection Plus additional death benefit payment.
    19. If a surviving spouse decides to continue the Contract under 
the successor owner/annuitant option, before calculating any possible 
increase in account value, the current account value will be reduced by 
the amount of any Credit applied within one year prior to the death of 
the owner/annuitant.
    20. Under the spousal protection option, before calculating any 
possible increase in account value, the current account value will be 
reduced by the amount of any Credit applied within one year prior to 
the death of the owner/annuitant.
    21. If the beneficiary continuation option is elected, the Company 
increases the account value to equal any elected GMDB, but before 
calculating any possible increase in account value, the current account 
value will be reduced by the amount of any Credit applied within one 
year prior to the death of the owner/annuitant.
    22. Under the GWB benefit, if the owner/annuitant dies, and the 
beneficiary continues GWB under the beneficiary continuation option, 
the GWB benefit base will be stepped up to equal the account value. 
However, in calculating the step-up, the account value will be reduced 
by the amount of any Credit applied within one year prior to the death 
of the owner/annuitant. Therefore, the GWB benefit base under the step-
up provision in connection with the beneficiary continuation option may 
be lower due to the Credit recapture (under some Contracts, the GWB 
ends if the beneficiary continuation option is selected; therefore, 
there is no step-up in the benefit base and the Credit recapture has no 
effect on the GWB benefit).
    23. If a Contract continues under any successor owner/annuitant 
feature, the account value may be reduced by the amount of any 
recaptured Credit (as

[[Page 42427]]

described above). If any portion of the Credit is recaptured from the 
fixed maturity option selected under GPB Type A, the amount in that 
fixed maturity option may not grow to equal the initial contribution 
plus the Credit. If any portion of the Credit is recaptured from a 
fixed maturity option under GPB Type B, the account value in that 
option would be reduced, but the guaranteed amount under GPB Type B 
would not be affected by the Credit recapture.

Applicants' Legal Analysis

    1. Section 6 (c) of the Act authorizes the Commission to exempt any 
person, security or transaction, or any class or classes of persons, 
securities or transactions from the provisions of the Act and the rules 
promulgated thereunder if and to the extent that such exemption is 
necessary or appropriate in the public interest and consistent with the 
protection of investors and the purposes fairly intended by the policy 
and provisions of the Act.
    2. Applicants request that the Commission issue an amended order 
pursuant to Section 6(c) of the Act, granting exemptions from the 
provisions of Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and 
Rule 22c-1 thereunder, to the extent necessary to permit Applicants to 
recapture Credits under 2006 Amended Contracts under the same 
circumstances covered by the Existing Order, and if a death benefit is 
payable due to a death during the one-year period following the 
Company's receipt of a contribution to which a Credit was applied, as 
described above.
    3. Applicants submit that the recapture of Credits under the 2006 
Amended Contracts will not raise concerns under Sections 2(a)(32), 
22(c) and 27(i)(2)(A) of the Act, and Rule 22c-1 thereunder for the 
same reasons given in support of the Existing Order. Applicants submit 
that when the Company recaptures any Credit, it is simply retrieving 
its own assets. Applicants submit that a Contract owner's interest in 
any Credit allocated on contributions made within one-year of the owner 
or annuitant's death is not vested. Rather, the Company retains the 
right to, and interest in, the Credit, although not any earnings 
attributable to the Credit.
    4. Applicants state that because a Contract owner's interest in any 
recapturable Credit is not vested, the owner will not be deprived of a 
proportionate share of the applicable Account's assets, i.e., a share 
of the applicable Account's assets proportionate to the Contract 
owner's annuity account value (taking into account the investment 
experience attributable to any Credit). The amounts recaptured will 
never exceed the Credits provided by the Company from its own general 
account assets, and the Company will not recapture any gain 
attributable to the Credit.
    5. Furthermore, Applicants submit that the recapture of Credits 
relating to contributions made within one year of death is designed to 
provide the Company with a measure of protection against ``anti-
selection.'' The risk here is that rather than investing contributions 
over a number of years, a Contract owner could make a contribution to 
receive the benefits of the Credit shortly before the death (either 
through an increased death benefit payment or an increased account 
value or other benefit to a continuing owner), leaving the Company less 
time to recover the cost of the Credit applied.
    6. Like the recapture of Credits permitted by the Existing Order, 
the amounts recaptured will equal the Credits provided by the Company 
from its own general account assets, and any gain associated with the 
Credit will remain part of the Contract owner's Contract value. 
Applicants are aware of no reason why the relief provided by the 
Existing Order should not also extend to the 2006 Amended Contracts.
    7. For the foregoing reasons, Applicants submit that the provisions 
for recapture of any Credit under the 2006 Amended Contracts do not 
violate Section 2(a)(32), 22(c), and 27(i)(2)(A) of the Act, and Rule 
22c-1 thereunder, and that the requested relief therefrom is consistent 
with the exemptive relief provided under the Existing Order.

Conclusion

    Applicants submit, based on the grounds summarized above, that 
their request for an order that applies to the Accounts or any Future 
Account in connection with the issuance of 2006 Amended Contracts 
described herein and Future Contracts that are substantially similar in 
all material respects to the 2006 Amended Contracts and underwritten or 
distributed by AXA Advisors, LLC, AXA Distributors, LLC, or the 
Equitable Broker-Dealers, is appropriate in the public interest for the 
same reasons as those given in support of the Existing Order. 
Applicants submit, based on the grounds summarized above, that their 
exemptive request meets the standards set out in section 6(c) of the 
Act, namely, that the exemptions requested are necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act, and that, therefore, the Commission should grant the requested 
order.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-11897 Filed 7-25-06; 8:45 am]
BILLING CODE 8010-01-P